Amulet Capital Partners (Amulet) is a middle-market private equity investment firm focused exclusively on the healthcare sector, now managing approximately $2.7 billion in assets.
To demonstrate its commitment to advancing sustainability, Amulet brought on Kathleen Quackenbush to spearhead the advancement of ESG integration across the firm and its portfolio companies.
For Amulet, leveraging insights from the firm’s ESG reporting process is essential in identifying value creation opportunities, driving deeper insights into daily operations, and facilitating the sharing of best practices across the portfolio. As Kathleen worked on enhancing the firm’s ESG program upon joining in 2023, she quickly realized a centralized solution to integrate ESG data efficiently to maintain meaningful and frequent engagement with portfolio companies was necessary.
The Challenge
Given the firm’s cadence of a quarterly ESG reporting cycle, as well as its continued growth — Amulet recently closed its third fund, surpassing its target by 20% — the firm understood the need to optimize the reporting process and transition away from a manual reporting process. Novata’s platform had several key features that aligned with Amulet’s needs for its ESG strategy:
- Streamlined Data Collection: Transitioning from manual reporting in multiple Excel sheets to a centralized platform.
- Cross-Functional Reporting: Allowing different departments (e.g., HR, Operations, IT) across its portfolio to input their respective metrics on the platform, alleviating the burden of reporting on one individual and increasing data quality and accuracy.
- Historical and Comparative Analysis: Enabling easy access to historical data and benchmarking against other companies.
Portfolio Company Engagement — What to Measure?
Amulet’s framework includes both portfolio-wide and sub-sector specific metrics but permits and encourages portfolio companies to add company-specific metrics to their reporting framework that may offer operational insights unique to their business model: “We don’t want our PCs to look at it as only reporting… we want it to be a two-way street in terms of what is being measured,” Kathleen said.
Kathleen also noted that measurement is an iterative process, one that is focused on incremental progress rather than immediate perfection. Amulet’s portfolio companies vary in operational capacity, ownership stage, and infrastructure — so some companies right at the onset during the onboarding process might not be able to report on 100% of the ESG metrics. “It’s important to meet our companies where they are,” Kathleen said. “With our newer companies… following that first collection period with Novata, we have a follow-up call with them to ask how it went, what can be improved, discuss capacity concerns, and propose additional metrics if they feel ready.” Kathleen seeks to take a tailored and supportive approach across the data collection process, recognizing the importance of continuous improvement.
Implementation and Impact
Since the start of 2024, Amulet has successfully completed three rounds of ESG reporting with Novata. The transition to the platform facilitated several positive outcomes:
- Enhanced Insights: Kathleen highlighted that the dynamic data analytics and visualizations provided by Novata enabled her to quickly compare company and industry performance and identify areas for improvement.
- Improved Efficiency: The centralized platform alleviated the need for manual data entry, allowing Kathleen to focus on more strategic tasks.
- Customizable Metrics: Novata’s flexibility in allowing companies to add specific metrics ensured that ESG reporting was relevant and impactful for each portfolio company.
One of the tangible benefits Kathleen observed is the ability to create custom dashboards that compare performance across funds and industries, identifying new areas of opportunity. Kathleen noted that the platform’s intuitive design and the ability to assign metrics to specific departments significantly reduced the burden of data collection and improved accuracy in their reporting: “With all the data living in one platform, it enables us to be a lot more forward-looking and proactive.”
Future Outlook
Looking ahead, Kathleen aims to further refine the ESG data collection process by:
- Iterating on Definitions: Continuously updating guidance to enhance resources and learnings.
- Streamlining Processes: Ensuring that the reporting process becomes more autonomous, reducing the need for manual interventions.
- Expanding Metrics: Introducing new metrics, such as impact-related metrics, to better capture the impact of our portfolio on patients and communities.
“As we recognize the rising regulatory complexities and stakeholder expectations around this topic, Novata has been a great resource and tool to help us feel more confident amid the evolving landscape,” Kathleen said.
For firms just beginning their ESG journey, Kathleen advises starting small and introducing ESG concepts incrementally to management teams. The process is a journey and takes time to understand what fits best for a firm and its companies.
She also emphasizes the importance of gaining buy-in from the investment teams first by focusing on material areas aligned with the firm’s investment thesis and portfolio companies’ business models to drive operational performance and meaning. Finally, with the ever-growing list of acronyms concentrating the market across reporting frameworks, disclosures, and regulatory requirements, Kathleen suggests firms conduct thorough research to select frameworks that align best with their investment thesis and are the least burdensome for their portfolio companies to increase enablement and value through the program.
